Monday, January 19, 2015

Pork prices down, but chicken flies high

Restaurateurs can expect some relief in the
price of pork as producers increase supply, but the cost of poultry should
remain high due to increased demand, industry experts say.

“Pork prices are beginning to return to
normal, thanks to the stabilization of the pig virus outbreak that plagued
producers last year,” said restaurant commodities expert John Barone. “The
virus still exists, but two things are happening right now: first, there are
two vaccines that seem to be working to a degree. Second, it looks as though
the sows that contracted the virus and passed it along to the piglets in their
litters have developed antibodies that are fighting off the spread of the
disease.”

According to Barone, resistance to the virus
is resulting in bigger herds and lower prices.

“The numbers are going in the right
direction,” he said. “We’re expecting a good amount of pork supplies by the
second half of the year and prices are forecast to be down double digits
percentagewise.”

Hudson Riehle, the National Restaurant
Association’s senior vice president of research, said higher wholesale food
prices last year put pressure on operators and relief this year would be
welcomed.

“The intensity of the pressure related to
higher wholesale food prices has been easing for some operators as prices on
certain commodities seem to be moderating,” he said. “But, because overall food
costs have increased for several years, prices in general remain elevated. The
impact on operators can vary depending on what’s on their menus. For example,
beef prices are expected to advance, but pork costs are likely to drop. That
will give operators something of a break for now.”

Barone noted that poultry production is on the
rise and prices are reflecting the increase. That could change, however, if
demand grows.

“Chicken could result in a bit of a tug of war
this year,” he said. “There will be a lot more supply, but also a lot more
demand. Because of the high cost of beef, anybody who can use chicken for every
[limited time offer] out there is going to. Operators last year couldn’t get
enough given the increased demand resulting from the shortages in beef and pork
supplies. They couldn’t even plan LTOs that required additional chicken volume,
especially on breasts or wings. This year, there’s going to be extra
availability and more demand, but the price ‑ because of that demand ‑ is going
to be close to year-ago levels.”

In 2014, poultry prices averaged around $1.12
per pound, according to USDA estimates.